This blog post is by James Beeton of 12 King’s Bench Walk.

A transcript of the decision of Singh J, which generated significant comment earlier this year, is now available on Lawtel. The full judgment contains important comments (set out below) on the correct approach to the assessment of costs in holiday claims when ADR schemes have not been utilized.

It will be recalled that:

  • Cs brought claims against D arising out of holidays booked at a resort in Turkey which they claimed to have been ruined as a result of an outbreak of gastric illness and substandard accommodation and service.
  • 152 of the Cs did not suffer illness but claimed that their holidays were ruined because, for example, members of their families had become ill.
  • The vast majority of the claims were eventually settled. Ruling on a number of preliminary issues which arose in the course of detailed assessment proceedings, Master James held that the 152 Claimants who had not suffered illness had acted unreasonably in failing to make use of a mediation scheme run by the Association of British Travel Agents (“ABTA”).
  • The ABTA scheme provided compensation of up to £25,000, which Master James considered would have been a suitable cap for the 152 non-ill Cs. She therefore limited the maximum costs payable by D in such cases to those that would have been payable under the scheme – some £264 each – commenting that ‘[w]here there is an established and cheap method of ADR the non-illness claimants did not in my view act reasonably by resorting to group litigation with Irwin Mitchell.’

That conclusion was overturned by Singh J in the following terms:

‘I do not consider that the position has yet been reached where the mere availability of an arbitration scheme will suffice to make it unreasonable in itself to embark on litigation instead… Rather, the true principle is that all the circumstances have to be considered.

Furthermore, it is important to recall that in the present case the stage of proceedings which had been reached was the detailed assessment of costs, not for example the earlier stage when a court has to decide whether to make an award of costs in a party’s favour at all. In the present case there were already, as I have mentioned, costs orders in place in favour of the claimants, including the 152 claimants who had not fallen ill. In my judgment the effect of the costs judge’s decision was in substance to negate the effect of those earlier orders completely.

‘The submission therefore, which was accepted by the costs judge, must be that for a claimant of this type even to enter into a CFA with solicitors, for example with a view to a letter before claim being sent, rather than to choose the voluntary arbitration scheme, is inherently unreasonable. In my judgment that goes too far as a matter of principle.

‘The facts of the present case also need to be borne in mind. The defendants were contesting liability for they had not made any offer of arbitration or mediation. It should also be recalled that in the present case the non-ill claimants would often be linked to the ones who had themselves fallen ill. It was not practical or realistic to expect that there would be separate claims since their claims to some extent would “piggyback” on the claims of those claimants who had fallen ill, so leading to the holiday for the entire family being spoilt.’

The transcript also provides a useful analysis of the cases of Halsey v Milton Keynes General NHS Trust [2004] EWCA Civ 576 and Lahey v Pirelli Tyres Ltd [2007] EWCA Civ 91, concerning the court’s approach to the assessment of costs when ADR was available and the general power of the court to disallow costs unreasonably incurred.

James Beeton Cross-Border

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